A China shock is shaking Silicon Valley

A Chinese AI startup, Zhipu (Z.ai), has emerged as a major competitor to Silicon Valley with its open-source GLM 5.2 model, challenging the U.S. AI establishment. The release coincided with Washington's regulatory moves on Anthropic's models, highlighting the growing threat from Chinese open-source AI.

In the span of time it took for Washington to restrict, then hit undo on limitations to Anthropic PBC’s top models, Silicon Valley woke up to Zhipu. Last year, when I spoke to Zhang Peng, the chief executive officer of the Beijing-based startup known abroad as Z.ai, it was still a little-known lab. What struck me was his focus on achieving artificial general intelligence and his unapologetic defense of open-source AI at a time when many were dismissing it as an admirable concept without a sustainable business model. The jury is still out on whether it is. But one thing has become clear: Open models from China now pose one of the biggest existential threats to the U.S. AI establishment. The release of GLM 5.2, Zhipu’s most advanced model, coincided with Washington’s seemingly ad hoc regulatory intervention around Anthropic’s top Fable 5 and Mythos 5 models. The timing couldn’t have been better.